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Soft Power, Geoeconomics, & Empathy

In China’s New Diplomacy

James C. Hsiung

New York University

Abstract (392 words)

China’s post-1990 diplomacy, featuring FTA networking moves, plus generous foreign

loans and development grants to developing countries, and other similar goodwill drives, are

often viewed by outside analysts as endeavors to build its own soft power. While this thesis is

largely true, it does not tell us what soft power means for a rising China, as contrasted to the

United States, the reigning hegemon. Nor does it adequately tell us what motivates and guides

the Chinese quest for soft power. This paper argues that while soft power to the U.S. hegemon

is to supplement its hard power, for China it is to offset its deficiency as a “partial power” (in

David Shampaugh’s term). Its purpose is more defensive, such as in making up for China’s lack

of a network of global bases and alliances in the security domain; and, more importantly, in

fencing off what are perceived as Western attempts at “soft-power denial” against China.

Particularly noteworthy are the two desiderata that dominate a campaign to build up or

salvage China’s soft power: geoeconomics and, to a lesser extent, empathy for the under-

privileged. The underscoring geoeconomic strategy reflects a Chinese realization that in the

post-Cold War age of globalization, a country’s economic security may rival --even eclipse-- its

military security interests; and that the new geoeconomic mode of power balancing takes the

form of building and joining super trading blocs. The same strategy dominates China’s oil

diplomacy and its latest move to close ranks within the BRICS group.

The role of empathy, on the other hand, may be found in China’s initiative to forgive

(cancel) loans that borrowers (esp. among the least developed nations) are unable to repay,

and, likewise, in specific projects to help an LDC (such as Sudan) to gain a foothold in the

world’s oil market by coaching it to develop its own untapped oil resources for export. This

trend has only continued with added vigor under Xi Jinping, the new Chinese President.

While the quest for soft power is a common goal of all major powers, the way the

Chinese pursue it offers a unique pattern worth closer scrutiny. The paper ends with a

suggestion, backed by concrete examples, that China and the United States need not be locked

in a zero-sum game in the quest for soft power or on grave concerns in the developing world.

Key words: soft power, “partial power,” geoeconomics, empathy, developing world,

developmentalism, “soft-power denial.”

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Introduction

The unrelenting rise of China has grabbed the attention of governments and analysts

alike as the single most important aspect of world politics, at the turn of the twenty-first

century. However, even among experts in both the international-relations and China-watching

fields, not too many are ready to grapple with the fact that this is not China’s first rise, but its

second. And, its current re-ascent follows an interregnum of one and a half centuries of

prostration, brought on by the combined crush of both domestic decay and foreign (Western

and Japanese) encroachments.1 For over a millennium (613-1820 A.D.), during its first rise,

China’s GDP was consistently larger than the combined total of all Europe.2 In the Westphalian

system of inter-state relations, unfortunately, there is no precedent of a re-rising power of

comparable magnitude to guide us in ascertaining the likely behavior of the re-rising China and

its effects on world order.

Viewing its phenomenal [re-]rise, international-relations experts differ on what to make

of China’s new-found power and its implications for world politics. For example, Kenneth Waltz

and his fellow neorealists foresee a collision course in which China, the contending power, will

be driven to challenge the U. S. predominance by an impulse to balance against it.3 David

Shambaugh, on the other hand, sees China as a “partial power,” which, unlike the United States,

has no network of global bases and alliances – and is not even the dominant power in its own

region (Asia). Dismissive of China’s global cultural presence, Shambaugh argues that China has

1 On China’s second rise, consult James C. Hsiung, China into Its Second Rise: Myths, Puzzles, Paradoxes, and

Challenge to Theory (World Scentific, 2012), esp. chapters 8 and 9; and Joseph S. Nye, Jr., “The Advantages of an

Assertive China,” Foreign Affairs, 90, no. 2 (2011), 54-67. 2 See data in Angus Maddison, Contours of the World Economy, 1-2003 A.D. (Oxford University Press, 2007), p.379f.

Also, Andre Gunder Frank, Re-Orient: Global Economy in the Asian Age (University of California Press, 1998). 3 Kenneth N. Waltz, “Structural Realism After the Cold War,” International Security, 25, no. 1, at 28-32; and 41; and

Johan Mearsheimer, “The Future of the American Pacifier,” Foreign Affairs, September/October, 2001, 46-61.

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to combat its soft-power deficiency and the stigma of a “mixed to poor international image.”4

This view literally echoes a thesis advanced by Joseph S. Nye, Jr., about China’s “soft power

deficit,” for which it has a lot of catching up to do.5 While former Secretary of State Hillary

Clinton laid “neocolonialism” charges at the doorstep of Beijing in its African policy,6 Derek

Mitchell traced China’s linkages with the developing world to Cold War origins but

characterized the post-Cold War Chinese policy as fueled by an interest in ensuring a peaceful

international environment beneficial to all nations, one that suits the needs of its own

sustained growth.7

In what he proffers as an age of “vulnerability interdependence,” in reference to the 21st

century, Richard Rosecrance notes that Chinese industries, while growing rapidly, may often be

subsidiaries (or joint-venture partners) of major world corporations located elsewhere (e.g., the

U.S., Europe, Japan, etc.). He calls this an age in which not even the United States can boast of

having attained unipolarity of economics. Under the circumstances, it is unlikely that China will

risk self-destruction by rocking the boat, or trying to destroy the existing system. Thus,

economic ties and cooperation with foreign powers, including the United States, Japan, the EU,

India, etc., will be preferable to military expansion against them, so concludes Rosecrance.8

4 David Shambaugh, China Goes Global: The Partial Power (New York: Oxford University Press, 2013). In the UNDP

Human Development Index (2012), China ranks No. 89, out of 192. 5 Joseph S. Nye, Jr., “China’s Soft Power Deficit—To Catch Up, Its Politics Must Unleash the Many Talents of Its Civil

Society,” Wall Street Journal, May 8, 2012; available at

. 6 “Hillary Warns Against ‘New Colonialism’ in Africa,” sourced from: . 7 Derek J. Mitchell, “China and the Deveoping World,” chapter 6 in The China Balance Sheet, edited by Fred

Bergsten et al. (Washington, D.C.: Peterson Institute, 2007). 8 Richard Rosecrance, “Power and International Relations: The Rise of China and Its Effects,” International

Perspectives, 7, no. 1 (2006), 31-35.

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Geoeconomics and China’s Quest

for Influence as a Rising Power

Rosecrance’s thesis above, in fact, represents a different line of inquiry conceived in the

premise of geoeconomics, as opposed to geopolitics that still dominates the realist and

neorealist thinking on world politics. It is commonly agreed among a growing number of IR

experts that the end of the Cold War has seen the rise of geoeconomics to rival geopolitics as a

desideratum of international politics.9

If we can extrapolate from the rich literature on geopolitics, the two most important

ingredients –- other than power itself – guiding the traditional balance-of-power reflex of

nations, are geography and ideology.10 In a geoeconomic balance of power game, by contrast, a

lot is determined by a player’s strategic autonomy linked to a number of conditions, viz.: (a)

self-sufficiency in, or access to, basic natural resources, such as energy and steel; (b) relative

freedom from long-term dependency on overseas markets; and (c) control of an inexhaustible,

inexpensive, and relatively reliable labor force.11

In the context of geoeconomics, national power for China, as the guarantee of economic

security and of a coveted Big Power status, inheres in the aggregate of a number of

components, such as human and technological resources, exportable capital, efficient

production of modern goods, influence over international economic decision-making, and the

9 I have defined geoeconomics more carefully in James C. Hsiung, “The Age of Geoeconomics, . . .,” chapter 2 in

Sujian Guo and Baogang Guo, eds., Greater China in an Era of Globalization (Lanhm: Lexington Books, 2010). See

discussion below. 10

Robert Strauss-Hupe, Geopolitics, the Struggle for Peace and Power (New York: Arno, 1944); Nicholas Spykman,

The Geography of the Peace (New York: Harcourt Brace, 1944); and Woodruff D. Smith, The Ideological Origins of

Nazi Imperialism (New York: Oxford University Press, 1986). 11

Robert S. Ross, “The Geography of Peace: East Asia in the Twenty-First Century,” International Security, 23, no 4

(spring 1999), 81-118.

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will to mobilize economic capacity for national ends.12 It appears that the endeavors made by

China in what analysts call its quest for soft power (see below) all conform to this very

prescription. These efforts include free trade association (FTA) networking, targeted FDIs, and

foreign aid/loan programs. The most important part of the Chinese strategy, we find, is to try

to win the hearts and minds of the developing world, across Latin America, Asia, and Africa.

This list does not imply a territorial partiality, so much as the result of a perceived problem

which, for lack of a better term, we shall call “soft-power denial” allegedly staged against China

by the West, including some European states and the United States, as we will explain below.

China’s Quest for Soft Power; Surmounting

Perceived Soft-Power Denial

Other than military might and cognate forms of coercive power, international-relations

scholars have long been aware of the importance of influence by attraction , which Joseph S.

Nye calls “soft power.”13 In Nye’s formulation, soft power is neither force, nor money,14 but the

sway over opinion (i.e., influence) and the power to inspire dreams and desires (hence,

attraction). Nye identifies three key sources of soft power, namely: political values, culture,

and legitimacy of foreign policy. If hard power is push, then soft power is pull. Soft power is like

a dance, in need of a partner.

12

Adapted from Robert E. Hunter’s formulation in “The United States in a New Era,” a chapter in U.S. Foreign

Policy After the Cold War, ed., Brad Roberts (Cambridge: MIT Press, 1992), 3-18. 13

Joseph S. Nye, Jr., “Soft Power,” Foreign Policy, No 80 (Autumn 1990), pp. 153-171; and Soft Power: the Means to

Success in Wold Politics (New York: Public Affairs, 2004). 14

Here below, we will discuss how money, in the form of aid or financing certain local infrastructure investments,

may attract the recipient state’s support for a peculiar mode of developmentalism which Stefan Halper attributes

to what he calls “Beijing Consensus.”

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For China, in this light, there are two major inherent challenges to its soft power quest:

(a) the wide gap in its (domestic) political values with the West, and (b) the lack of a substantial

cultural presence.15 Both of these put the country in a relatively weak position in competition

with the U.S.-led developed world. It pays for us, therefore, to note the peculiar ways in which

the Chinese attempt to overcome their soft-power deficit. In the first place, unlike the United

States, whose superpower status is universally recognized and beyond challenge, a re-emergent

China still on its path of (a second) ascent, however, has an urge for being duly recognized as a

great power befitting its status as the world’s second largest economy, if not yet an equal of the

United States.16 To Chinese chagrin, much of the West (including some European countries and

the United States) appeared in Chinese perception, rightly or wrongly, to be bent on denying

China such recognition and, worse still, trying to throw road blocks in the path of its ascendancy.

This mindset is best confirmed in a 2001 article by John Mearsheimer published in Foreign

Affairs, arguing that the United States should strive to block China’s rise, by aligning with Japan,

among other strategies.17

A most concrete evidence for this perceived concerted effort to deny China its quest of

soft power (and Big Power status) can be found in some events preceding the 2008 Beijing

Olympics. China had hoped its hosting of the Olympic games would reap a windfall of prestige

and influence (i.e., soft power), only to find its goal undercut by a pre-planned series of messy

15

On this I am in full agreement with Shamgaugh’s view noted above. 16

Contrast the different ways by which the Xi Jinping-Obama meeting of July 7-8, 2013, on the Annberg Estate in

Sunnylands, CA, was received and presented on American and Chinese media. It was treated by American media,

by and large, as merely a new beginning of relations between China and the United States free from the Cold War

baggage (the New York Times even shunted the conclusion of the summit meeting to p. 5, in its July 9, 2013 issue).

But, it was treated as a headline story in Chinese media (e.g., Xinhua agency and Global Times, a subsidiary of

Renmin ribao) as marking the beginning of a new “Big Power” Diplomacy. 17

John Mearsheimer, in his 2001 Foreign Affairs article (“The Future of the American Pacifier,” pp. 46-61), explicitly

urged that the United States knock China out before it completes its rise, by aligning with Japan.

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and humiliating Olympic-torch relay interceptions in London, Paris, San Francisco, etc. These

relay interceptions were accompanied by massive protests by Western-supported Tibetan

dissidents and their local (Western) cheerers against China.18 Other incidents perceived by the

Chinese as U.S. attempts to undercut Chinese influence included Secretary of State Hillary

Clinton’s open offers, beginning in 2009, of U.S. backing to southeast Asian nations in their

disputes with China, over South China Sea claims. An immediate result was the Philippines’

spirited standup to China in the Scarborough Shoal (Huangyan in Chinese) confrontations.19

Another such example, already noted, was her charge that the Chinese charm offensive in

Africa, including loans, aid, and FDIs, represented a modern version of “neocolonialism.”

While Joseph Nye bases his penetrating studies of soft power mainly on the experience

of the United States, the reigning hegemon, we need to adapt the concept of soft power (and

its quest) to accommodate China’s peculiar experience and behavioral record thus far. To be

specific, we need to recognize the problem manifested in the above instances confronting

China as, in short-hand label, that of “soft power denial.” I derived the idea from the term “sea

denial,” long established in naval warfare strategy. In short, sea denial is a military term for

attempts to deny an adversary’s ability to use the sea. During World War I and World War II,

Germany pursued sea denial using U-boats. The United Kingdom, for all its Royal Navy’s surface

forces, responded with severe rationing and development of anti-submarine weapons and

techniques.20 Just as the United Kingdom responded to the German sea denial with severe

measures, so too did China today respond to what it perceived as a Western attempt at soft-

18

Jing Sun, “Soft Power’s Rise and Fall in East Asia,” Current History, vol. 112, no. 755 (Semptember, 2013), at 230. 19

See report available at: . 20

See “Sea Denial,” .

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power denial with an all-out counter campaign aimed at safeguarding and expanding its soft

power, as we will see below.

Two Prongs in China’s Soft-Power Strategy

Earlier, we have noted David Shambaugh’s observation regarding China’s power

deficiency, which echoed a similar thesis advanced by Joseph S. Nye, Jr. The same view on the

defensive quest for soft power to counter the “China threat” scare is, furthermore, shared in

Joshua Kirlantzick’s account of the Chinese “charm offensive.”21 We have also noted a Chinese

perceived soft-power denial enforced by China’s detractors to curtail its influence. I might add,

here, that what matters for China’s response is not whether this perceived soft-power denial

plot is real or imaginary; but, rather, whether China believes it is true. In other words, whether

in Beijing’s view the observations by Shambaugh, Nye, and Kirlantzick on China’s soft power

deficit is true is, in and of itself, decisive in determining the Chinese strategy in response.

Thus viewed, it is only pertinent for us to comprehend the Chinese strategic interest in

light of a desire to compensate for their country’s power deficiency by redoubling their efforts

in building networks of free-trade associations (FTAs) and initiating targeted FDIs and foreign-

aid/loan programs. For the convenience of discussion, we will lump these endeavors under two

headings, as two prongs in China’s soft-power strategy, both aimed at winning greater

geoeconomic security, and securing its great power status, by cultivating or winning wider

Chinese influence overseas. We shall begin with China’s FTA networking efforts, and following

that we shall proceed to China’s goodwill campaign in the developing world.

21

See Joshua Kilantzick, Charm Offensive: How China’s Soft Power Is Transforming the World (2007).

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The Imperative of China’s FTA Networking

Not until the early 1990s did China begin to show its interest in regional FTA agreements,

although it always had an eye on becoming a party to the GATT. This timing is understandable,

because competitive (and copycat) regional FTAs did not begin to emerge worldwide until after

the world was jolted by the announcement of the Single Europe Act (SEA) in 1986. The

prospective rise of a single, integrated EC-92 (a transition to a European Union of 15 members,

eventually to grow to 27) prompted the making of the APEC (Asian Pacific Economic

Cooperation) forum in 1989, the MERCOSUR in South America in 1991, the AFTA (ASEAN-FTA)

in 1992, and the NAFTA (North American Free Trade Association) in 1994. In China’s 9th Five-

Year Plan, drafted in 1996, a call was made for the strengthening of South-South cooperation,

including Chinese economic and trade relations with the developing countries. The same Plan

also called for China “to actively participate in and defend the global multilateral trading system,

develop both bilateral and multilateral trade . . .”22

The Asian Financial Crisis of 1997-1999, unexpectedly, presented China with a first

opportunity to negotiate with its Southeast Asian neighbors, who were badly hit and lost

confidence in global institutions, to hatch the idea of Asian regional institution building. From

these Asian neighbors’ point of view, global institutions like IMF and World Bank had failed to

fulfill the promise of the fabled “lender of last resort” goal for which they were first created,

with a view to precluding another Great Depression of the 1930s. At China’s first summit

meeting with ASEAN (Association for Southeast Asian Nations), in December 1997, President

22

Henry Gao, “China’s Strategy for Free Trade Ageements,” sourced from

.

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Jiang Zemin called on the two sides to establish a Neighboring Partnership of Mutual Trust.23

Going against the trend of the contagious rounds of currency devaluation by countries

throughout the region, when their usual robust economies were sent tumbling down under the

Financial Crisis, China held out tenaciously with its refusal to devalue its RMB, which helped

many of the neighboring countries. This policy not only won China trust and respect, but also

helped ease the way for the eventual Asianization bandwagon, among its neighbors.24

A report in October 2001 by the ASEAN-China Expert Group on Economic Cooperation,

which was established the previous year, concluded that an FTA would be in the interest of

both sides. At the ASEAN-China summit meeting, the next month, the two sides decided to

create an ASEAN-China FTA (A-C FTA) within 10 years.25 However, right the next year, on

November 4, 2002, the two sides signed a Framework Agreement on Comprehensive Economic

Cooperation, ushering in the tariff reduction process that led to the eventual elimination of

tariffs among the two sides within an emergent free trade area (FTA).26

What prompted the collapsing of the 10-year transition period into just one year, in the

appearance of the A-C FTA, was China’s accession to the World Trade Organization (WTO) in

December 2001. Until then, some ASEAN sates had paradoxically viewed China as a potential

threat, rather than a partner. One of the primary reasons for the formation of ASEAN in 1967,

it is to be recalled, was to counter the possible spread of Communism in the region. With its

rise as one of the most competitive producers of many products in the world, China proved to

23

Text of Jiang’s speech is available at . 24

On lessons from the Asian Financil Crisis, including the Asianization trend in its wake, see James C. Hsiung, ed.,

Twenty-First World Order and the Asia Pacific (New York: Palgrave, 2001), pp. 86-91; 152f; 347; 353; 370. 25

As reported by the Xinhua Net, 11/6/2001, available at . 26

Full text of the agreement is available at .

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be a dragnet for extra-regional foreign direct investments (FDIs), sucking them away from

ASEAN markets. As such, China became an economic threat to ASEAN. Furthermore, a

remarkable similarity was found in the industrial structures of the Chinese and ASEAN

economies, both of which specialized in labor-intensive products, vying for the same markets in

the United States, the EU, and Japan. Besides, increases in China’s exports in the previous two

decades were made at the expense of its Southeast Asian neighbors. Its entry into the WTO,

however, changed all this, ending ASEAN’s fear of China as an economic threat. First, China

would now be subject to WTO rules, including non-discrimination, ban on non-tariff barriers,

and ban on dumping. Second, within WTO rules, A-C FTA would guarantee the ASEAN states a

first-mover advantage in the world’s largest emerging market.27

The ASEAN-China FTA set an example for other similar FTA arrangements China was yet

to enter into in the following years. By 2013, China could count eight more such agreements

already concluded, respectively with: Chile (2005 ), Pakistan (2006 ), New Zealand (2008 ),

Singapore (2008 ), Peru (2009 ), Costa Rica(2013 ), Iceland (2013 ), and Switzerland (2013 ).

This list does not include the CEPA (Closer Economic Partnership Agreement) signed with each

of the two Special Administrative Regions (SARs) of China, namely: Hong Kong and Macao, both

former colonies but retroceded to China, respectively, in 1997 from Britain, and 1999 from

Portugal.

The largest FTA on this list, nevertheless, remains the ASEAN-China Free-trade

Framework Agreement signed in 2002, as was subsequently extended by the Trade in Goods

27

Henry Gao, “China’s Strategy for Free Trade Agreements,” available at < http://law.smu.edu.sg/directory/henry-

gao>, p. 6.

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Agreement in 2004 and the Trade in Services Agreement in 2007. 28 In addition, China’s FTA

negotiations were continuing with South Korea and Japan; South Korea, separately; Australia;

Norway; the EU; the Gulf Cooperation Council; the South African Customs Union; etc.

China’s Own FTA Agenda

Confronted with the recent U.S. support of TPP (Trans-Pacific Partnership), coming in

tandem with the Obama Administration’s pivot to Asia as part of its “re-balance” strategy,

China was forced to respond in its own way, to counter what it perceived as a concerted

American attempt to contain Chinese influence. In addition, the TPP, as perceived by the

Chinese, also presented a geoeconomic power-balancing challenge. Hence, China had to

respond to this dual challenge by staging, in turn, a mega-FTA in which it would play a leading

role. As Wei W. Li, President of the Developmental Research Center of the Chinese State

Council (the Cabinet), stated in a keynote address at the Asian Financial Forum, the Chinese

Government’s “unswerving policy” was to accelerate the development of free trade areas with

China’s major trading partners in Asia. After noting that some of the Asian countries may be

lured away by ex-regional economic cooperative schemes outside Asia, Li cited an old Chinese

proverb as an advice to them, “Distant relatives are not as good as close neighbors.”29 This

belies a Chinese concern of the possible pull, for them, of TPP and a future TPP-EU connection.

Under Chinese initiatives, leaders from ASEAN-10 and six FTA partners -- including China,

Japan, South Korea, India, New Zealand, and Australia -- gathered in Brunei, in May 2013, for

their first round of negotiations, with a view to launching a super FTA that would encompass all

28

Texts of the two subsequent agreements are available from . 29

Cf. China Financial, available from .

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16 economies, to be known as Regional Comprehensive Economic Partnership (RCEP), with a

target date of 2015.30 Once fully established, the RCEP will be the world’s largest free trade

area, serving a 3.3 billion population and accounting for 30 per cent of world trade. Its

combined GDP of $20 trillion is bigger than that of the United States ($15.6 trillion, according to

IMF reckoning) or the combined total of EU-27 ($16.6 trillion, also according to IMF). As typical

of a geoeconomic power-balancing game, which is non-zero-sum in nature, seven countries

have overlapping membership in both the U.S.-led TPP and the China-led RCEP.31 In any event,

the RCEP fits well as part of Chinese response to deflect any attempt under Obama’s “re-

balance” strategy to forestall Chinese influence, or, in the language introduced above, to effect

a soft-power denial against China.

Earlier, we have noted China’s signing of FTA agreements with three additional non-

Asian countries (Costa Rica, Iceland, and Switzerland) in the first half of 2013 alone. All this was

happening within months after Xi Jinping became the Chinese President in March, following his

ascendency to the office of the Communist Party’s General Secretary the previous November.

In addition, China’s FTA negotiations were earnestly continuing with a wide range of countries

in Asia, Europe, and Africa. Along with these endeavors, the exuberant Chinese push for the

birth of the RCEP, also during this same period, may bespeak a concerted effort under Xi

Jinping’s leadership to fight back against isolation, and to circumvent any foreign attempt to

undercut Chinese influence abroad.

30

The first round of RCEP negotiations was concluded on May 16, 2013, with a second round to follow later in the

year. 31

The seven are: Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam.

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China and the Developing World32

China’s relations with the developing world has a long history which underwent several

stages. During the Cold War, they were guided by ideology and a need to cultivate friendship

and popular support in the Third World, in order to break the diplomatic isolation stemming

from China’s exclusion from much of the world’s goings-on, due to the denial of diplomatic

recognition by the United States and its allies. In late 1953, Premier Chou En-lai (Zhou Enlai)

outlined the “Five Principles of Peaceful Coexistence” (PCX) as the guiding principles of Chinese

foreign policy.33 The Five Principles--, i.e., mutual respect for territorial integrity and

sovereignty, non-aggression, non-interference in internal affairs, equality and mutual benefit,

and peaceful coexistence – all appealed to the developing world that, like China, had borne the

brunt of Western colonialism and “imperialism.”

During the 1960s, however, China broke ranks with postcolonial governments in the

developing world, as it began to support revolutionary pro-Communist regimes in many of

these new countries. This rupture coincided with the outbreak of the chaotic, riotous Cultural

Revolution at home. In the post-Mao period of the 1970s, under the Dengist reforms, often

dubbed a great leap outward, however, China’s approach to the developing world de-

emphasized dogma (and revolution) as a driver of policy, in favor of pragmatism and economic

liberalization. Beginning in the 1980s, China withdrew support from communist insurgencies

and began to establish political and economic relations with all countries, in both the

32

This discussion is largely based on Derek Mitchell, cited in n. 6 above, with necessary additions and updating. 33

PCX, which also became known in Indian as panch shila, was embodied in the Sino-Indian Trade Agreement on

Tibet, signed by Chou with his India counterpart, Jawaharlal Nehru, on April 29, 1954. The principles were more

formally reaffirmed in a joint declaration issued by the two leaders on June 28, 1954, and in Chou’s joint

declaration the next day with U Nu, the Burmese Prime Minister. See James C. Hsiung, Law & Policy in China’s

Foreign Relations (New York: Columbia University Press, 1972), p. 32ff.

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developed and developing world. Under the rhetoric of South-South cooperation, China also

began to provide military aid -– some including missiles-- to a number of select countries, such

as Algeria, Iran, Iraq, Pakistan, Saudi Arabia, and Syria, to win influence and to show continued

Chinese commitment to the developing world.34

In Africa, from the mid-1990s on, it is in the area of large-scale infrastructure financing—

with a particular focus on hydropower generation and railways-- that China was especially

known for in its commitment. According to a study by the World Bank, at least 35 countries

were engaging with China on infrastructure finance deals, the biggest recipients being: Nigeria,

Angola, Ethiopia, and Sudan. These deals were channeled primarily through the China Ex-Im

Bank.35

To bring things up to date, China’s current pitch for the developing world can be

summed up in two rubrics: building a “harmonious world” and espousing a common concern of

the South nations in the United Nations Security Council, namely, to close the wealth gap

between the developed and the developing world.36 In the following pages, I shall address two

additional issues. First, I wish to comment on a common allegation in Western media reports

that China’s approach to the less developed countries, especially in Africa, is only prompted by

its own thirst for the natural resources (e.g., oil) that these countries have to offer. Second, I

wish to note a re-emphasis in China’s Third World policy on the African continent, consequent

34

Mitchell, op. cit., no. 6 above. 35

Vivien Foster, et al., Building Bridges: China’s Growing Role as Infrastructure Financier for Sub-Saharan Africa,

World Bank: Trends and Policy Options, No. 5 (PPIAF, 2009), pp.16-28. 36

As outlined in a Defense White Paper in December 2006, China seeks to foster “a security environment

conducive to China’s peaceful development,” and to build a “harmonious world of enduring peace and common

development; available at: . Derek Mitchell noted

a significant change under President Hu Jintao beginning in 2002, catering to the interests of the developing world

(incl. closing the wealth gap), in contrast to his predecessor, Jiang Zemin, who focused primarily on improving

relations with the United States. See Mitchell, ibid., n. 6 above, pp. 2-3. Also, Jing Sun, op.cit., n. 17 above.

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upon its re-focusing on relations within the BRICS group. All this shift seems to bear the imprint

of the new leadership team in Beijing since the 18th Party Congress in late 2012.

China’s Interest in the South Reexamined

The term “South” is used here as a generic term for the developing world,

encompassing Africa, Southeast Asia, and Latin America. Much of the Western media

reportage on China’s interest in the South, ranging from investments, loans, to developmental

aid (ODA, or official developmental assistance), zeroes in on China’s resource scarcity and

needs for oil, raw materials, and markets as a rationale for its involvement and, in many

instances, its generosity. While this is true as a whole – and one should not impute pure

altruism to all of China’s commitments in the developing world -- the view suffers from two

defects: (a) The charge is too sweeping to take into account those projects financed by the

Chinese Ex-Im Bank in areas like hydropower generation and railway, noted above, that were

totally without regard to natural resource extraction, nor any swap such as between financing

and oil; and (b)The same view does not show an adequate grasp of a Chinese keen sensitivity to

the stirrings among the less fortunate nations, as in their plight in fighting poverty and all the

ills that come with it (like AIDS). True, recent developments in domestic politics within China

may not have advanced the cause of human rights or democratization, to the liking of Freedom

House or Amnesty International. But, on the other hand, this is no reason why China’s

international behavior showing empathy to the stirrings of the less fortunate and downtrodden

should be denied due recognition.

17

One indication of this empathetic sensitivity is that China, now with loads of cash to

spare, provided more loans (upwards of $110 billion) to the developing nations than the World

Bank did during 2008-2010, the period when the world was hit by a global financial tsunami,

following the collapse of Wall Street, as symbolized by the demise of Lehman Brothers.37 In

addition, Beijing forgave (cancelled) billions of dollars in loans owed by LDC borrowers found

unable to meet their debt payment obligations. Nevertheless, Western media gurus

indiscriminately imputed an ulterior motive to China’s aid policy and loan/debt reduction (even

cancellation) practice. Besides, Chinese assistance to Sudan during its civil war even prompted

Western media to clamp down the epithet of “rogue donor,” for letting “Sudan get away with

murder in Darfur.”38 But, allegations like this have to be assessed against the broader

background of China’s aid and loan policy and practice. From 2000 to 2009, for example, China

cancelled 312 debts of 35 African countries, like Sierra Leone, Eritrea, and Zimbabwe, without

regard to whether they had oil or other natural resources that China needed.39 In an

authoritative study, much of it based on her on-site interviews and collection of data, Deborah

Brautigam noted that China indiscriminately “gives aid to every single country in sub-Sahara

Africa that follows the One China Policy.”40 As to the Sudan, she related that after the chorus of

outside criticisms of China siding with Khartoum’s obduracy, a quiet visit by Chinese President,

37

“Westward Ho: Asians March into Africa,” sourced from: . 38

Quoted in Deborah Brautigam, The Dragon’s Gift: The Real Story of China in Africa (New York: Oxford University

Press, 2011), at 281. 39

“China Tightens Links with ‘Rich’ Africa to Feed Her Thriving Economy,” Business Daily (14 July 2011), available

from . 40

Brautigam, ibid., no. 36 above, p. 278 (emphasis in the original).

18

HU Jintao, in early 2007, did produce salutary results. Sudan finally agreed to jettison its

objection to a U.N. proposal for a joint U.N.- African Union peace-keeping force to enter and

police Darfur.41

At the U.N. Conference on the Least Developed Countries held in Turkey, 11 May 2011,

it became known that China had, after offers of aid to 46 LDCs, donated an additional $50

billion to the IMF, with an explicit instruction that the funds be used first and foremost to help

the LDCs to be named by that institution. Obviously, how the IMF was going to dispose of the

funds would be beyond China’s control, and without regard to whether the recipient countries

had any natural resources to offer to the Chinese donor. All this seems to lend credibility to the

statement made by the Chinese delegate at the Conference that his country’s policy on aid (and

loans) to the LDCs was without political or economic strings attached.42

Chinese Foreign Aid, Loans, Trade,

And Developmentalism43

In recent decades, China has emerged as an important player in foreign aid and

developmental assistance. Its state-guided but market-conforming model of development

seems to have attracted much fascination, especially among its aid or loan recipients in Africa.

This growing interest in the Chinese (Dengist) model of development, sometimes known by

what some outside analysts called the “Beijing Consensus,”44 came as the result of an

41

Op. cit. 42

Available from: ; also James C.

Hsiung, China into Its Second Rise (World Scientific, 2012), p. 250f. 43

“Developmentalism” is an umbrella term used for China’s developmental assistance, plus the appeal of the

Dengist model of state-guided, partially-marketized economy credited for China’s phenomenal growth, which may

attract influence in the developing world. 44

See Joshua Cooper Ramo, Beijing Consensus (London: Foreign Policy Centre, 2004); also a book by the same

name authored by Stephan Halper, published by Basic Books in 2010.

19

unexpected twist in the post-Cold War transformation in the international ODA (official

developmental assistance) regime. Following declines in the levels of financial support from

one’s former ideological allies during the Cold War, developing nations have had to look for

alternative sources of aid outside institutions like the IMF and the World Bank. With the

growing visibility of the Chinese economic success story, many developing nations now realize

that China, beyond being just an additional source of developmental loans, demonstrates that

there is an alternative to the Western economic model (known as the Washington Consensus)

of development. This discovery incidentally dovetails with the Chinese pressing need for a

breakthrough in browbeating the soft-power denial plot allegedly staged by the United States

and its allies. (Parenthetically, neither the government nor the academics in China embrace the

epithet “China model,” because they do not expect their own brand of market socialism to be

duplicable elsewhere. They prefer to call it the “Chinese way,” instead.)45

China’s increasing participation in foreign aid since the early 1990s has drawn the

attention of the international community, as an alternative donor source to the traditional

group of donors identified with the Organization of Economic Cooperation and Development

(OECD), outside the IMF and the World Bank. It is part of China’s economic aspirations in

developmental cooperation, as laid down in the Program for China-Africa Cooperation in

Economic and Social Development, which in turn is a subsidiary of the Forum on China-Africa

Cooperation (FOCAC) set up in 2000.46 Inspired by the Five Principles of Peaceful Coexistence

45

I found this out during my research trips in Beijing and Shanghai in 2011. See discussions in Chapter 7 of my book

China into Its Second Rise (World Scientific, 2012). For similar reasons, I suspect the Chinese would be timid in

accepting the idea of “Beijing Consensus” first proposed by Joshua Cooper Ramo (see n. 43 above), as a short-hand

label for the China model. 46

A very useful discussion of this topic is in Ellen Lammers, “How Will the Beijing Consensus Benefit Africa,”

available at: .

20

(PCX), with particular emphasis on non-interference in internal affairs, the Chinese program

delivers aid without conditionality, such as is found in the aid given by traditional (Western)

donors like the OECD, the IMF, and the World Bank. Conditions attached to aid packages

provided by the latter three usually raise questions about human rights, good governance,

economic reforms, or environmental concerns.

While the Chinese approach causes concern, and consternation, among Western donors,

it is deeply appreciated by African governments. Many African leaders view the emerging

pattern of South-South relations in the post-Cold War era as a historic opportunity to gain their

autonomy from their dependency on the West. They are enamored with the example of China

in that 400 million people were lifted out of poverty in just two decades, following the initiation

of the Dengist economic reform, which was autonomously executed without external

assistance. This example has bolstered African countries’ optimism that they too can devise

their own developmental path, without foreign dependency. While this optimism may or may

not be realistic, and despite the uncertainty regarding the duplicability of the Chinese model,

one thing is sure: It proves China’s developmental aid has elicited unbounded African

enthusiasm in the attractiveness of the Chinese model as an alternative.

However, the reality is not all as cut and dry as it appears, and Chinese aid is not

“selfless,” although empathy did play a role. China’s commitment to non-interference, as

Lammers is quick to point out,47 evidently does not prevent it from simultaneously pursuing its

own political interests. After all, another part of the Five Principles of PCX does call for “mutual

benefit” (emphasis on “mutual”). The surge in the early 1990s of Chinese interest in Africa

47

Ibid., p. 3

21

(including generous aid packages), by coincidence or not, followed the 1989 events in

Tiananmen Square, in the aftermath of which China was faced with condemnation from the

West. Beijing needed new allies, and its involvement in Africa did seem to provide it with

diplomatic support.48 Another self-interest in China’s involvement with Africa is the scale of

trade. In 2010, for example, China was Africa’s biggest trading partner, crossing the $120 billion

threshold, most of it in China’s favor.

Economic considerations, like trade profits and investment returns, may adequately

account for the behavior of other donors. But, in the case of China, there were in some cases

“add-on values” that entered into the equation of Chinese economic cooperation in the

developing world. These add-on values for the recipient, more often than not, took the form of

some concrete advantageous legacy left behind with the recipient nation, even if the Chinese

aid team exited thereafter. One example is the forgotten (and much maligned) case of Sudan,

which invited the Chinese Petroleum & Natural Gas Corporation (Petro China) in 1995 to come

in to participate in the building of Sudan’s oil industry from scratch. Since this undertaking

departed from the usual “Angola mode,” or a straightforward “oil for infrastructure” deal,49 I

will address it in greater detail below.

A consortium of four parties was formed in 1996, in which Petro China would have 40%

of the interest, and the remainder would be distributed among a Malaysian firm (30%), a

Canadian firm (25%), and the Sudan National Petroleum Corporation (5%). The consortium had

48

Lammers noted that African states did support China in different multilateral settings such as the U.N.

Commision on Human Rights, op.cit., n. 17. See also I. Taylor, “China’s Foreign Policy Towards Africa in the 1990s,”

Journal of Modern African Studies, vol. 36, no. 3 (1998), 443-460; and D. Tull, “China’s Engagement in Africa,”

Journal of Modern African Studies, vol. 44, no.1 (2006), 459-479. 49

The “Angola mode” is named after the example provided by a deal made with Angola with the Chinese Em-Im

Bank, whereby repayment of loan for infrastructure development is made in terms of natural resources (oil). See

World Bank report, Ibid., n. 34 above. Under this arrangement, China received 43% of Angola’s oil export in 2010.

22

a Chinese manager, who headed a team of 100 experts with overseas experience sent from

China. Using the experience (and the daring-do spirit) of the Chinese Daqing Oilfield as a model,

the Sudanese oil consortium succeeded in turning Sudan from an earlier net oil importer of 2

million tons of crude a year – with all its (heretofore untapped) oil deposits -- into an oil

exporter for the first time three years later, in September 1999. The Chinese team of experts

trained Sudanese recruits and turned them into skilled oil industry workers, so that they could

take over and run Sudan’s nascent oil industry (SUDAPET) even if the Chinese team, together

with its army of 6,000 field workers, should pull out. The Chinese also helped build the oil

pipelines so that Sudanese produced oil could be transported on their way to world markets.

These oil pipelines (total dead weight of 200,000 tons of steel) were manufactured by the

Bao’an Steel Works in China. And, the Chinese workers helped lay the 1,506 KMs (circa 900

miles) of oil pipelines.50

The ancient Chinese philosopher Zhuang Zi is credited with giving this advice on how

best to help someone to stanch hunger: “Offering him two fish,” he said, “would satisfy him for

one meal, but, teaching him how to fish would keep him away from hunger for the rest of his

life.” What China has been doing in its developmental aid to countries like Sudan seems to be

following this Zhuang Zi advice. The obvious difference is: Instead of teaching them how to fish,

the Chinese now were teaching the African natives how to extract oil (from their previously

untapped reserves, if any) and to market it to the world’s oil consumers. Obviously, results like

50

Part of this is based on my interviews with one former Petro China worker in Sudan, now living in Beijing; and the

rest is derived from a number of sources, viz.: “zhong-guo yuan-zhu xia de sudan jingji jianshe qiji” [The Economic

Miracle in Sudan Achieved under Chinese Assistance], available from:

; and http://club.kdnet.net/dispbbs.asp?id=2480629&boardid=1>;

plus Petro China’s report on oil cooperation with Sudan, available at:

.

23

this are not taken into account by Western critics who grumbled there is little evidence to show

that Chinese developmental assistance has produced any positive impact on broader “human

development.”

An Update: China’s Role in

BRICS and Soft Power

We have thus far seen how the rising China has designed ways to offset its soft-power

deficit and, moreover, to counter a perceived plot of soft-power denial against it by the U.S.-led

developed world. The focus in the Chinese strategy is to win the hearts and minds of the

developing world, more especially in Africa. Much of it is moved by something not of its own

choice, namely: the challenge presented by the United States, the reigning hegemonic power,

in what is perceived as a concerted campaign to contain China’s rise by encircling it, for

example, with a super geoeconomic bloc acronymed TPP, with a potential link with the EU. In

addition to responding with the hatching of a RCEP, China since 2012 has upgraded its counter

coup in search of support within the BRICS grouping.51 At the fourth annual summit of the

original BRIC nations (i.e., Brazil, Russia, India, and China), held in Beijing in 2012, two decisions

were made: (a) inviting South Africa to join the BRIC group, hence to become BRICS; and (b)

launching a study into the feasibility of a BRICS development bank, to be finalized at the next

year’s summit, which was to be hosted by South Africa.

At the 2013 BRICS summit, President Xi led the negotiations that yielded the final

decision to bring the proposed BRICS development bank into being without delay. Although

modeled in spirit after the Bretton Woods system, it will be different from its IMF and World

51

Modeled after the original contraction of BRIC, first used by Goldman Sachs, for the major emerging markets:

Brazil, Russia, India, and China. At the Chinese behest, South Africa was added, to form BRICS.

24

Bank components in two main ways: First, the new BRICS development bank will be free from

U.S. control; and, second, it will consequently be in a position to offer developing countries

easier and more direct access to developmental loans and related aids.52 According to latest

reports, a subsequent meeting of the group’s financial ministers, held in India, decided on an

initial $50 billion capitalization for the bank, to be equally shared by the five members, although

China had proposed a $100 billion capital and sought a bigger share for itself.53

China’s role in the BRICS has a dual significance for its quest of soft power. In the first

place, there is complementarity among the five emerging economies, and China is an obvious

leader by the size of its economy and its dynamic growth. Brazil is known as the world’s raw

material base; Russia, the world’s “gas station;” India, the world’s office (due to its IT

sophistication); South Africa, the world’s treasure trove; and China, the world’s factory, to boot.

With its members coming from Asia, Africa, Europe, and Latin America, the BRICS is far more

representative of the world’s key regions than is any other group.54 As a group of the leading

emerging markets, BRICS represents 26% of the world’s landmass, 42% of the world population,

20% of the global GDP, 15% of world trade, and 75% of the world’s foreign reserves.55 Within

the group, China’s economy is about 20 times the size of South Africa, and four times as big as

Russia’s and India’s. The five economies have set the goal of a $500 billion total trade volume

within BRICS by 2015. China’s trade with the other BRICS countries in 2011 was broken down as:

$84.2 billion with Brazil, $70 billion with India, $45.43 billion with South Africa, and $78 billion

52

“BRICS states agree to establish BRICS Development Bank,” sourced from: . 53

“BRICS Agree Capital Structure for Development Bank,” Reuters report, 8/28/2013. 54

Ji Peiding, “BRICS Will Reshape the International Landscape,” Foreign Affairs Journal (Beijing), No.107 (Spring

2013), pp. 61-70, at 66. 55

Ibid., p. 64.

25

with Russia. By these measures, China enjoys an obvious edge as a natural leader in the BRICS.

To the extent that BRICS is going to lead the world’s various regional groupings and FTAs, China

is going to be an indisputable leader and a world-class great power, a status that China aspires

to.

The second advantage that the BRICS affiliation confers on China is the emergent BRICS

development bank. On a bigger scale than China alone can hope to accomplish, the new BRICS

development bank will mobilize resources for infrastructure and sustainable development

projects in other emerging economies and developing countries, and supplement the existing

efforts of multilateral and regional financial institutions for global development. China-in-BRICS,

hence, will command respect and attract attention in a way that, likewise, cannot be denied by

anyone.

Concluding Remarks

The above scenario is not an arm-chair strategy worked out by an ivory tower strategist.

Evidence that it is a game plan purposefully carried out in action can be found in President Xi’s

first moves in foreign visits to Russia and Africa soon after assuming office in the spring of 2013,

as already noted. During his first stop in Russia, he signed agreements establishing a “strategic

partnership” between Russia as a foremost oil supplier and China as the world’s largest oil

importer. Next, in the iterim before his stop in South Africa to attend the fifth BRICS summit, he

made a point in visiting two other African countries. On his state visits to Tanzania and the

Congo Republic, where he signed several trade and investment agreements, Xi announced a

Chinese commitment to build infrastructures (such as port facilities) in these countries. Not

26

only that, he announced that in the next two years, 2013-2015, China would extend to Africa

developmental loans of up to US$20 billions. As if to counter Hillary Clinton’s “neo-colonialism”

charge, Xi announced that Africa, with which China posted a $200 billion trade in 2012, was

China’s “perpetual friend,” owing to their common painful experiences with “imperialistic” (and

colonialist) oppressions in the past.56

These hyperboles may sound like clichés, but when judged against the background of

China’s efforts at overcoming its short-power deficit and countering the alleged U.S.-led soft-

power denial against China, as noted above, they gain an added meaning in that they reflect an

awareness among high-level Chinese leaders about their country’s need to do extra, even bend

backward, to secure whatever goodwill China can generate in the developing world, in order to

offset its soft-power deficiency.

In closing, I would like to address two additional points: First, if we reconsider Joseph

Nye’s definition, soft power is the “ability to get what one wants through attraction rather than

coercion or payments.” Strictly speaking, China’s use of easy loans, grants-in-aid, and even

cancellation of loan repayments, to win goodwill and endorsement in the developing world

(mostly in Africa), is tantamount to an evasive form of “payments” in Nye’s formulation. The

use of these variations of “payment” cannot but be a confirmation that the Chinese are deeply

aware of their soft power deficit, about which they have a lot of catching up to do, plus their

perceived problem with a soft-power denial enforced by the West.

My next point is really related to a question, first raised, and answered, by Derek

Mitchell, namely: Do U.S. and Chinese interests clash or converge in the developing world.

56

“China’s President Xi Jinping hails ties with Africa,” BBC, March 25, 2013, sourced from

.

27

Most U.S. observers, including the media, usually gloat over the strategic rivalry between the

two countries in the developing world. But, Mitchell maintains that U.S. and Chinese interests

“overlap substantially.” Both countries share a realization that poverty and poor governance

breed instability, crime, and terrorism in the developing countries. Both have an interest in

“empowering developing nations to meet their domestic challenges and in forestalling the

emergence of failed or failing states,” which could be the breeding grounds for terrorism,

infectious diseases, and international crime.57 In full agreement with Mitchell’s assessment, I

would add two comments of my own. One, I know for a fact that China, as Mitchell suggests,

does show a keen awareness of the danger posed by failed states to international peace and

security, and, moreover, to human rights. A case in point is in regard to Somalia, where for two

decades there has been no central government. Under conditions of this domestic anarchy,

warlords have taken over; and the ceaseless in-fights have created chaos, misery, and

massacres of helpless civilians. In U.N. discussions of the right of the world community to

intervene in failed states like Somalia, China is known generally in support of the right of

humanitarian intervention, known as the R2P (for “right to protect”), but at the same time it

has urged that the state’s capability of protecting the people (and human rights) be

strengthened, by installing, in the Somalia case, an effective central government.58 Conceivably,

China could have done more to help the developing nations, especially in failing states, if its

attention were not distracted by what it perceives as a soft-power denial problem that it must

contend with.

57

Derek Mitchell, ibid., n. 6 above, p. 122. 58

Hsiiung, ibid., n. 1 above, p. 275.

28

Two, if we abandon our usual “either/or” mindset, and adopt a “both/and” paradigm in

viewing Sino-U.S. relations, then it will be possible for us to see China and the United States not

necessarily locked in a zero-sum game, when it comes to certain outstanding issues in the

developing world. In fact, what China can do could actually supplement U.S. policy goals, or

vice versa. For example, Chinese and U.S. navies can join hands in taking on the necessary fight

against the voracious pirates in waters off Somalia. Over in the Middle East, furthermore, the

United States is faced with a united front of opposition from the Arab states, and the only U.S.

ally is Israel. China, on the other hand, is on good terms with both Israel and the Arabs.

Earlier in 2013, within two days -- May 6 and May 7 -- Chinese President Xi Jinping received

Palestinian Authority President Mahmoud Abbas and Israeli Prime Minister Benjamin

Netanyahu, separately in Beijing. According to reports, he urged new Israel-Palestinian peace

talks, and received positive response.59 The Chinese have credibility with both sides: On the

Palestinian side, because China is sympathetic to Palestinian statehood while supporting the

idea of peaceful solution in lieu of war; on the Israeli side, China’s Shanghai (the Hongqiao

district, to be exact) was, during World War II, home to many of the 18,000 Jews granted refuge

from the horrors of Nazi persecution, and many more Jews from Russia had been resettled in

Henan province, in north China, following the Bolshevik revolution.60 This, conceivably, is an

asset that could be added to the U.S.’s soft power in dealing with the Middle East tangle, that is,

if China could be inducted to the American side. (7,590 words, incl. the Abstract and the notes)

_____________________________________________________________________________

59

“Beijing Urges New Israel-Palestiniian Peace Talks,” sourced from: . 60

“Netanyahu in China Says Jews Capable of Self-Defense,” .